In many cases, the end of the year gives you time to step back and take stock of the last 12 months. This is when many of us take a hard look at what worked and what did not, complete performance reviews, and formulate plans for the coming year. For me, it is all of those things plus a time when I u...

Astronics Corporation (NASDAQ: ATRO), aleading
provider of advanced technologies for the global aerospace and defense
industries, today reported financial results for the three and nine
months ended September 29, 2012.

Three Months Ended

Nine Months Ended

Sept 29, 2012

Oct 1, 2011

% Change

Sept 29, 2012

Oct 1, 2011

% Change

Sales

$

68,899

$

56,404

22.2

%

$

199,026

$

167,007

19.2

%

Gross profit

$

16,717

$

14,255

17.3

%

$

51,891

$

43,147

20.3

%

Gross profit percentage

24.3

%

25.3

%

26.1

%

25.8

%

SG&A

$

9,062

$

6,360

42.5

%

$

27,195

$

19,849

37.0

%

SG&A percent to sales

13.2

%

11.3

%

13.7

%

11.9

%

Income from Operations

$

7,655

$

7,895

(3.0

)%

$

24,696

$

23,298

6.0

%

Operating margin %

11.1

%

14.0

%

12.4

%

14.0

%

Net Income

$

4,930

$

6,665

(26.0

)%

$

16,219

$

16,422

(1.2

)%

Net Income %

7.2

%

11.8

%

8.1

%

9.8

%

Peter J. Gundermann, President and Chief Executive Officer, commented,
“We experienced another strong quarter achieving record sales and also
had bookings that were our second highest ever. Operating income for the
quarter was solid even though we incurred increased engineering and
development activity and an increase to our warranty and inventory
reserves. These items added $4.3 million of expense to the quarter
compared with the prior year period. Last year’s third quarter
benefitted from an unusually low 11% tax rate.”

Consolidated Review

Consolidated sales for the third quarter of 2012 increased by 22.2% to
$68.9 million, including $4.1 million associated with acquisitions,
compared with $56.4 million for the same period last year. Aerospace
sales increased by $12.3 million and Test Systems sales increased by
$0.2 million.

Consolidated sales for the first nine months of 2012 increased by 19.2%
to $199.0 million, including $10.1 million associated with the
acquisitions compared with $167.0 million for the same period last year.
Aerospace sales increased by $34.5 million, while Test Systems sales
decreased by $2.5 million in the first nine months of 2012.

Consolidated gross margin decreased to 24.3% in the third quarter of
2012 compared with 25.3% in the third quarter of 2011. The lower gross
margin was a result of increased engineering and development (“E&D”)
costs and increases to inventory and warranty reserves, partially offset
by the leverage achieved from the increased sales as compared with the
2011 third quarter. E&D costs were $12.8 million in the third quarter of
2012 compared with $9.5 million in the same period of 2011, an increase
of $3.3 million. Expense relating to warranty and inventory reserves
resulted in a $1.0 million increase in cost of goods sold compared with
the 2011 third quarter.

Year-to-date consolidated gross margin improved slightly to 26.1% in the
first nine months of 2012 compared with 25.8% in the first nine months
of 2011. The improved margins for the first nine months were a result of
leverage that was achieved from increased sales volumes partially offset
by increased E&D costs and higher inventory and warranty reserves. E&D
costs were $33.9 million in the first nine months of 2012 compared with
$26.6 million in the same period of 2011, an increase of $7.3 million.
The Company expects full year consolidated E&D expenses for 2012 to be
in the range of $44 million to $46 million, up from earlier 2012
estimates of $40 million to $43 million. Warranty and inventory reserve
expense was up $1.1 million for the 2012 nine-month period compared with
the same period of 2011.

Selling, general and administrative (“SG&A”) expenses were approximately
$9.1 million, or 13.2% of sales, in the third quarter of 2012 compared
with $6.4 million, or 11.3% of sales, in the same period last year. The
increase was due primarily to the November 2011 acquisition of Ballard
Technology (“Ballard”) and the July 30, 2012 acquisition of Max-Viz,
which added $1.9 million to SG&A. Higher compensation costs also
contributed to the increase.

Year-to-date SG&A expenses in 2012 were approximately $27.2 million, or
13.7% of sales, compared with $19.8 million, or 11.9% of sales in the
same period last year. The increase was due primarily to the acquisition
of Ballard and Max-Viz, which added $4.4 million to SG&A in the first
nine months of 2012. Also contributing to the increase were higher
compensation and legal costs in the 2012 nine-month period.

Income tax expense in the third quarter and year-to-date periods of 2012
was 33.2% and 32.1%, respectively, compared with 11.2% and 24.8% for the
same periods last year. Last years’ third quarter and year-to-date tax
rates reflect the favorable resolution of research and development tax
credits relating to prior years and the reduction of reserves
established in prior years related to those credits.

Net income for the third quarter of 2012 was $4.9 million, or $0.33 per
diluted share, a decrease of $1.8 million from $6.7 million, or $0.45
per diluted share, in the third quarter of 2011. Year-to-date net income
was $16.2 million, or $1.07 per diluted share, in 2012, down $0.2
million when compared with $16.4 million, or $1.11 per diluted share, in
the first nine months of 2011. Earnings per share for all periods
presented reflect the effect of the 15% Class B share distribution
declared for shareholders of record on October 29, 2012 as though the
distribution had taken place at the beginning of each period.
Approximately 1.9 million Class B shares are expected to be distributed
on or about November 12, 2012.

Aerospace Segment Review(refer
to sales by market and segment data in accompanying tables)

In the third quarter of 2012, sales to the Commercial Transport market
increased primarily on higher demand for Cabin Electronics products as
well as growth in sales of Airframe Power, Aircraft Lighting and
Avionics from growing demand in both OEM and retrofit applications.
Military sales were flat when compared with the prior year’s third
quarter as Avionics sales offset lower Aircraft Lighting and Airframe
Power sales to this market. Sales to the Business Jet market were up
slightly when compared with last year’s third quarter as higher Aircraft
Lighting sales and the addition of enhanced vision systems in the
Avionics product line were partially offset by a decrease in airframe
power sales to this market. The Avionics product line is comprised of
the Ballard and Max-Viz acquisitions.

In the first nine months of 2012, sales to the Commercial Transport
market increased primarily on higher demand for Cabin Electronics
products as global demand for passenger power systems continued to be
strong. Aircraft Lighting, Airframe Power and Avionics also had higher
sales to this market in the nine-month period. Military sales in the
first nine months were up compared with last year, primarily as a result
of the addition of Avionics databus products. This was somewhat offset
by lower sales of Aircraft Lighting products and Airframe Power products
to this market. Sales to the Business Jet market were up when compared
with the first nine months of last year for similar reasons as noted in
the quarter.

Aerospace operating profit for the third quarter of 2012 was $10.6
million, or 16.1% of sales, compared with $9.9 million, or 18.5% of
sales, in the same period last year. The increase in the operating
profit was due to leverage from higher sales volume partially offset by
increased E&D costs, increased compensation costs and warranty and
inventory reserve adjustments.

Aerospace operating profit for the first nine months of 2012 was $33.4
million, or 17.5% of sales, compared with $28.2 million, or 18.1% of
sales, in the same period last year. The decrease in the operating
profit was due to leverage from the increased sales volume partially
offset by increased E&D costs and increased compensation and legal
expense.

Sales in the 2012 third quarter increased slightly by $0.2 million to
$3.1 million when compared with sales of $2.9 million for the same
period in 2011. Sales for the first nine months of 2012 decreased $2.6
million to $8.8 million when compared with sales of $11.4 million for
the same period in 2011.

Test Systems operating loss was $1.1 million and $3.5 million for the
third quarter and nine-month period of 2012, respectively. Revenue
generated by this segment was not sufficient to cover fixed costs.
Astronics believes the technology developed in this segment continues to
have potential and is marketing its technology to U.S. and other global
defense entities during a difficult economic period for test equipment
in the defense industry.

Balance Sheet

Cash at the end of the 2012 third quarter declined by $3.3 million to
$7.6 million compared with $10.9 million at December 31, 2011.
Year-to-date cash provided by operating activities of approximately
$17.1 million was more than offset by capital expenditures of $10.6
million of which approximately $7.3 million was related to the
construction of a new facility in Kirkland, Washington that Astronics’
Advanced Electronic Systems subsidiary will move into in December of
this year. In addition, the Company reduced long-term debt $8.9 million
during the year.

The Company expects capital spending in 2012 to be approximately $18
million to $21 million.

Outlook

On September 29, 2012, backlog was $115.6 million, up from backlog of
$114.2 million at the end of the trailing second quarter of 2012 and
improved over backlog of $110.2 million at the end of the third quarter
of 2011. Approximately $67 million of backlog is expected to ship by the
end of 2012 and approximately $100 million is expected to ship over the
next four quarters.

Mr. Gundermann concluded, “We remain optimistic about the future in
light of increasing build rates of new commercial aircraft and our
introduction of new, innovative products. Despite the economic weakness
globally and the overhanging threat of sequestration, we remain
confident in our strategy of expanding and broadening our product
offerings and remaining focused on the most attractive aircraft
platforms.”

The Company expects 2012 revenue to be in the range of $267 million to
$275 million, up from $229 million in 2011. Astronics anticipates that
approximately $257 million to $263 million of forecasted 2012 revenue
will be from its Aerospace segment, while approximately $10 million to
$12 million of the forecasted revenue will be from its Test Systems
segment.

Third Quarter and Year to Date 2012 Webcast and
Conference Call

The Company will host a teleconference at 11:00 AM ET on Tuesday,
November 6, 2012. During the teleconference, Peter J. Gundermann,
President and CEO, and David C. Burney, Executive Vice President and
CFO, will review the financial and operating results for the period and
discuss Astronics’ corporate strategy and outlook. A question-and-answer
session will follow.

The Astronics conference call can be accessed by calling (201) 689-8562.
The listen-only audio webcast can be monitored at www.astronics.com.
To listen to the archived call, dial (858) 384-5517 and enter conference
ID number 401261. The telephonic replay will be available from 2:00 p.m.
on the day of the call through Tuesday, November 13, 2012. A transcript
will also be posted to the Company’s Web site, once available.

ABOUT ASTRONICS CORPORATION

Astronics Corporation is a leader in advanced, high-performance
lighting, electrical power and automated test systems for the global
aerospace and defense industries. Astronics’ strategy is to develop and
maintain positions of technical leadership in its chosen aerospace and
defense markets, to leverage those positions to grow the amount of
content and volume of product it sells to those markets and to
selectively acquire businesses with similar technical capabilities that
could benefit from our leadership position and strategic direction.
Astronics Corporation, and its wholly-owned subsidiaries, Astronics
Advanced Electronic Systems Corp., Ballard Technology, Inc., DME
Corporation, Luminescent Systems Inc. and Max-Viz, Inc., have a
reputation for high-quality designs, exceptional responsiveness, strong
brand recognition and best-in-class manufacturing practices. The Company
routinely posts news and other important information on its Web site at www.astronics.com.

For more information on Astronics and its products, visit its Web
site at www.astronics.com.

Safe Harbor Statement

This news release contains forward-looking statements as defined by the
Securities Exchange Act of 1934. One can identify these forward-looking
statements by the use of the words “expect,” “anticipate,” “plan,”
“may,” “will,” “estimate” or other similar expressions. Because such
statements apply to future events, they are subject to risks and
uncertainties that could cause actual results to differ materially from
those contemplated by the statements. Important factors that could cause
actual results to differ materially include the state of the aerospace
and defense industries, the market acceptance of newly developed
products, internal production capabilities, the timing of orders
received, the status of customer certification processes, the demand for
and market acceptance of new or existing aircraft which contain the
Company’s products, customer preferences, and other factors which are
described in filings by Astronics with the Securities and Exchange
Commission. The Company assumes no obligation to update forward-looking
information in this news release whether to reflect changed assumptions,
the occurrence of unanticipated events or changes in future operating
results, financial conditions or prospects, or otherwise.

ASTRONICS CORPORATION

CONSOLIDATED INCOME STATEMENT DATA

(Unaudited, $ in thousands except per share data)

Three Months Ended

Nine Months Ended

9/29/2012

10/1/2011

9/29/2012

10/1/2011

Sales

$

68,899

$

56,404

$

199,026

$

167,007

Cost of products sold

52,182

42,149

147,135

123,860

Gross profit

16,717

14,255

51,891

43,147

Gross margin

24.3

%

25.3

%

26.1

%

25.8

%

Selling, general and administrative

9,062

6,360

27,195

19,849

SG&A % of Sales

13.2

%

11.3

%

13.7

%

11.9

%

Income from operations

7,655

7,895

24,696

23,298

Operating margin

11.1

%

14.0

%

12.4

%

14.0

%

Interest expense, net

274

390

803

1,461

Income before tax

7,381

7,505

23,893

21,837

Income tax expense

2,451

840

7,674

5,415

Net Income

$

4,930

$

6,665

$

16,219

$

16,422

Net income % of Sales

7.2

%

11.8

%

8.1

%

9.8

%

*Basic earnings per share:

$

0.35

$

0.48

$

1.14

$

1.18

*Diluted earnings per share:

$

0.33

$

0.45

$

1.07

$

1.11

*Weighted average diluted shares outstanding (in thousands)

15,090

14,865

15,103

14,793

Capital Expenditures

$

6,074

$

5,896

$

10,570

$

12,875

Depreciation and Amortization

$

2,124

$

1,198

$

4,955

$

3,592

*All share quantities and per share data reported has been restated to
reflect the impact of the three-for-twenty Class B stock distribution to
shareholders of record on October 29, 2012.

ASTRONICS CORPORATION

CONSOLIDATED BALANCE SHEET DATA

( in thousands)

9/29/2012

12/31/2011

(Unaudited)

ASSETS:

Cash and cash equivalents

$

7,567

$

10,919

Accounts receivable

47,330

35,669

Inventories

46,651

40,094

Other current assets

6,132

5,628

Property, plant and equipment, net

48,777

41,122

Deferred taxes long-term

9,003

7,039

Other long-term assets

2,857

3,249

Intangible assets, net

17,133

14,000

Goodwill

21,948

17,185

Total Assets

$

207,398

$

174,905

LIABILITIES AND SHAREHOLDERS' EQUITY:

Current maturities of long term debt

$

8,273

$

5,290

Accounts payable and accrued expenses

39,486

28,187

Long-term debt

25,125

27,973

Other liabilities

16,879

10,592

Shareholders' equity

117,635

102,863

Total Liabilities and Shareholders' Equity

$

207,398

$

174,905

ASTRONICS CORPORATION

SEGMENT DATA

(Unaudited, $ in thousands)

Three Months Ended

Nine Months Ended

9/29/2012

10/1/2011

9/29/2012

10/1/2011

Sales

Aerospace

$

65,788

$

53,509

$

190,212

$

155,650

Test Systems

3,111

2,895

8,814

11,357

Total Sales

68,899

56,404

199,026

167,007

Operating Profit and Margins

Aerospace

10,577

9,897

33,358

28,223

16.1

%

18.5

%

17.5

%

18.1

%

Test Systems

(1,132

)

(832

)

(3,525

)

(1,360

)

(36.4

)%

(28.7

)%

(40.0

)%

(12.0

)%

Total Operating Profit

9,445

9,065

29,833

26,863

13.7

%

16.1

%

15.0

%

16.1

%

Interest Expense

274

390

803

1,461

Corporate Expenses and Other

1,790

1,170

5,137

3,565

Income Before Taxes

$

7,381

$

7,505

$

23,893

$

21,837

ASTRONICS CORPORATION

SALES BY MARKET

(Unaudited, $ in thousands)

Three Months Ended

Nine Months Ended

2012

9/29/2012

10/1/2011

% change

9/29/2012

10/1/2011

% change

YTD %

Aerospace Segment

Commercial Transport

$

47,933

$

35,259

35.9

%

$

133,220

$

102,456

30.0

%

67.0

%

Military

8,733

8,737

-

%

27,813

25,916

7.3

%

14.0

%

Business Jet

6,835

6,363

7.4

%

21,773

20,425

6.6

%

10.9

%

FAA/Airport

2,287

3,150

(27.4

)%

7,406

6,853

8.1

%

3.7

%

Aerospace Total

65,788

53,509

22.9

%

190,212

155,650

22.2

%

95.6

%

Test Systems Segment

Military

3,111

2,895

7.5

%

8,814

11,357

(22.4

)%

4.4

%

Total

$

68,899

$

56,404

22.2

%

$

199,026

$

167,007

19.2

%

100.0

%

ASTRONICS CORPORATION

SALES BY PRODUCT

(Unaudited, $ in thousands)

Three Months Ended

Nine Months Ended

2012

9/29/2012

10/1/2011

% change

9/29/2012

10/1/2011

% change

YTD %

Aerospace Segment

Cabin Electronics

$

37,802

$

28,403

33.1

%

$

104,056

$

81,352

27.9

%

52.4

%

Aircraft Lighting

17,221

16,936

1.7

%

54,520

52,657

3.5

%

27.5

%

Airframe Power

4,366

5,020

(13.0

)%

14,077

14,788

(4.8

)%

7.1

%

Avionics

4,112

-

100.0

%

10,153

-

100.0

%

4.5

%

Airfield Lighting

2,287

3,150

(27.4

)%

7,406

6,853

8.1

%

3.6

%

Aerospace Total

65,788

53,509

22.9

%

190,212

155,650

22.2

%

95.6

%

Test Systems Segment

3,111

2,895

7.5

%

8,814

11,357

(22.4

)%

4.4

%

Total

$

68,899

$

56,404

22.2

%

$

199,026

$

167,007

19.2

%

100

%

ASTRONICS CORPORATION

ORDER AND BACKLOG TREND

(Unaudited, $ in thousands)

Q4 2011

Q12012

Q22012

Q32012

Trailing Twelve Months

12/31/2011

3/31/2012

6/30/2012

9/29/2012

9/29/2012

Sales

Aerospace

$

58,224

$

62,001

$

62,423

$

65,788

$

248,436

Test Systems

2,932

3,137

2,566

3,111

11,746

Total Sales

$

61,156

$

65,138

$

64,989

$

68,899

$

260,182

Bookings

Aerospace

$

54,048

$

58,567

$

75,654

$

64,674

$

252,943

Test Systems

2,506

2,272

1,526

2,144

8,448

Total Bookings

$

56,554

$

60,839

$

77,180

$

66,818

$

261,391

Backlog*

Aerospace

$

97,903

$

94,468

$

107,699

$

110,045

N/A

Test Systems

8,409

7,544

6,504

5,537

N/A

Total Backlog

$

106,312

$

102,012

$

114,203

$

115,582

N/A

Book:Bill Ratio

Aerospace

0.93

0.94

1.21

0.98

1.02

Test Systems

0.85

0.72

0.59

0.69

0.72

Total Book:Bill

0.92

0.93

1.19

0.97

1.00

* On July 30, 2012, Astronics Corporation acquired Max-Viz, Inc. which
included a backlog of approximately $3.5 million for the Aerospace
segment. Max-Viz sales for the period were $1.0 million.

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